Norway's Sovereign Wealth Fund has as much capital stock as the total flow of Mexico's Entire Economy. Obviously Mexico has a heck of a lot more capital stock which is required to create such a large economic flow.
This is kind of a bad comparison to make since they're comparing the value of Norway's fund versus the output of Mexico's economy (which would be more like revenue in the context of a company/investment).
Why do people keep comparing assets ($) to GDP ($/year)?
If you want to compare the two, 1 year isn't a reasonable term. You can convert a rate into a current asset value by multiplying by a P/E ratio, anywhere from 10 to 20 these days.
News media love to do this on a personal level too. Every month CBC runs a story about how Canadians' household debt (mostly mortgages) is 170% of their disposable income.
It isn't completely meaningless to compare these, but the units need to be right: Rather than "170%" (which scares people because it's more than 100%!) we should say that household debt is equal to 20 months of disposable income.
Yeah, I'm genuinely surprised and sad when I see posts like these make it to Hacker News, it just show how ignorant most people are about fundamentals of economics.
One way to compare would be to say that all of Norway could earn as much money, just sitting on ass all day, every day, as 3% (safe withdrawal rate) of Mexico, working 43 hours a week (actual stat from OECD).
Alternately, compare to a country with lower GDP.
"Norway (5.3M people) makes as much sitting on its investments as Latvia (2M people) earns working 36.5 hours per week."
This has the advantage of comparing a Scandinavian country with a Baltic nation, with cultural and geographic proximity.
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[ 4.5 ms ] story [ 57.0 ms ] thread> $190,000 for every one of Norway’s 5.2 million citizens
https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...
ITT Edit... lots of people complaining about the comparison (like me).
If you want to compare the two, 1 year isn't a reasonable term. You can convert a rate into a current asset value by multiplying by a P/E ratio, anywhere from 10 to 20 these days.
It isn't completely meaningless to compare these, but the units need to be right: Rather than "170%" (which scares people because it's more than 100%!) we should say that household debt is equal to 20 months of disposable income.
Alternately, compare to a country with lower GDP.
"Norway (5.3M people) makes as much sitting on its investments as Latvia (2M people) earns working 36.5 hours per week."
This has the advantage of comparing a Scandinavian country with a Baltic nation, with cultural and geographic proximity.
The Mexican economy generates $1 trillion of value per year.
The Norway Sovereign Wealth fund has $1 trillion in capital.
Over the past 2 years, it seems that Norway's fund generated an average return of about 10% a year.
That means Norway's fund is "equivalent" to a $100 billion GDP country, about 1/10th of Mexico.
[1]: https://fred.stlouisfed.org/series/RKNANPMXA666NRUG